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COMMISSION OF THE EUROPEAN COMMUNITIES

Proposa I for a

C0M(93) 363 final - SYN 468

Brussels, 28 July 1993

COUNCIL DIRECTIVE

amending Council Directives 77/780/EEC and 89/646/EEC in the field of credit institutions.

Council Directives 73/239/EEC and 92/49/EEC in the field of non-life insurance,

Council Directives 791267/EEC and 92/96/EEC in the field of life assurance, and

Council Directive 93/22/EEC in the field of investment firms

in order to reinforce prudential supervision (presented by the Commission)

EXPLANATORY MEMORANDUM

I. Main objectives of the proposal.

The main aim of this directive is to propose amendments to the framework

directives in the financial services sector, including banking, insurance and

securities activities. The proposed changes concern Directives 77/780/EEC and

89/646/EEC (First and Second Banking Coordination Directives) for the banking

sector, Directives 73/239/EEC, 79/267/EEC, 92/49/EEC and 92/96/EEC (Non­

Life and Life Insurance Directives) for the insurance sector and Directive

93/22/EEC (Investment Services Directive) for the securities sector. This new

directive will strengthen the powers of supervisors, making them better equipped to

prevent cases of fraud and other irregularities in the fmancial services sector.

The above-mentioned framework directives provide for authorization procedures for

credit institutions, insurance undertakings and investment firms engaging in the

activities covered by the scope of the respective directives. Under the principle of

"mutual recognition", and on the basis of the authorization granted by the home

Member State authorities, these different financial undertakings will be allowed

. either freely to provide financial services on a cross-border basis or to set up

branches in other Member States.

A certain numbers of recent cases of fraud in the financial services sector, and in

particular the case of the Bank for Credit and Commerce International (BCCI), gave

.1 2

rise to the question as to whether the supervisory regime put in place by the

fmancial services directives, based on the mutual recognition approach, was

adequate. In this connection, a number of enquiries were conducted, such as the

study completed by the EC Banking Advisory Committee, the Report prepared by

the Basle Committee on Banking Supervision and the Bingham Report in the UK.

Finally, an announcement was made by Sir Leon Brittan at the ECOFIN Council in

November 1992, making reference to the major conclusions of the enquiries and

stressing that although the basic approach of the financial services directives was

sound there were nevertheless certain respects in which the arrangements for

fmancial supervision should be stre~gthened.

Firstly, the fmancial services directives envisage the authorization of a credit

institution, insurance undertaking or investment flnil as an entity in its own right, or

in other words without reference to the group in which the individual entity might

be placed. The only relevant existing rule in this connection is a requirement that

"qualifying" shareholders should be suitable persons, but this is not sufficient to

cover all the different possibilities that could arise. In the light of this, it is

proposed that where the financial undertaking is part of a group, the group structure

should be sufficiently t:ranspatent as to enable the financial undertaking itself to be

supervised effectively. To this end, sufficient information must be provided to the

competent authorities at the moment of initial authorization, and also on the

occasion of any subsequent change in the group structure.

Secondly, it was considered necessary and desirable to ·ensure that the head office

of financial undertakings remain within the same Member State as the registered

.·

3

office. This is designed to enable supervisory authorities to maintain close contact

with the financial undertaking's decision-making body. This rule has already been

included in the Investment Services Directive (lSD), so that on this point it is only

the banking and insurance directives that need to be modified.

Thirdly' provision is made to ensure that adequate n gateways n exist so that

prudential information can be transmitted backwards and forwards between

competent authorities and certain other bodies which have been entrusted with

specific tasks within each Member State. Exchange of confidential information for

supervisory purposes is already allowed in the framework directives ( 1) between

competent authorities and bodies involved in the liquidation of financial

undertakings and (2) between competent authorities and statutory auditors. It is

proposed that this possibility should be extended to the authorities which supervise

the liquidators and the auditors respectively. The purpose of this extension is to

enable the competent authorities to check whether the liquidators and/or auditors

have been carrying out their duties correctly. It is also proposed to extend the list of

potential recipients of information so as to include company law inspectors and

bodies which are responsible for overseeing payment systems and settlement

services. This possibility of exchanging information is important for competent

authorities to be able to catch wrongdoers and should be allowed to take place

provided that it is for supervisory purposes only and provided conditions of

professional secrecy are strictly observed.

With reference to this issue, lSD contains (in Article 25(9)) a Commission

statement to the effect that a proposal for an amendment as regards exchange of

4

information is to be tabled by the end of July 1993. This present proposal 1s

intended to give effect to that stated objectivt.

Lastly, it is considered appropriate to require that auditors engaged in the

preparation of financial undertakings' statutory accounts should communicate· to the

competent authorities irregular circumstances which come to their notice in the

course of carrying out this activity.

The need for a directive to attain the objectives stated above is justified by the fact

that the financial services directives represent essential instruments to achieve the

European market for financial services and fall within the exclusive competence of

the Community. Therefore, this directive, which puts forward amendments to

strengthen supervisory powers in the three sectors in a horizontal manner, must fall

within the EEC competence, according to Article 57 of the EEC Treaty. Since there

is a need for coordination within the Community on a cross-border basis, a directive

constitutes the most appropriate form of attaining the desired objectives.

II. Comments on individual articles.

Article 1

This is a definition article, which clarifies the concept of "group". The two

elements of the defmition are derived from the definition of "participation". set out

in Article I of Directive 92/30/EEC, and "control", as defmed in Article I of

5

Directive 89/646/EEC, Directive 92/49/EEC, Directive 92/96/EEC and Directive

93/22/EEC.

Article 2

This article contains general provisions, with the objective of ensuring greater

transparency of group structures and to prevent the creation of non-transparent

relationships: competent authorities are empowered to refuse authorization if they

feel it is difficult to carry out effective supervision of financial undertakings because

of opaque relationships between different entities; furthermore, authorities will

receive detailed information by the undertakings about the structural organization of

the group; finally, information must also be provided in case of changes in the

structure of the groups.

Article 3

This article requires financial undertakings to locate their head offices and

registered offices in the same Member State, so that competent authorities may have

effective contact with the decision-making bodies of institutions and thus achieve a

more direct control. This rule is already contained in the lSD as regards investment

firms and will be extended to credit institutions and insurance undertakings.

6

Articlt .....

This article represents an extension of provisions contained in the directives

regulating the three financial sectors. which already allow some exchange of

confidential information between different authorities, in the same country· and in

different countries, and between competent authorities and certain other bodies.

This exchange of information will now also be made possible with the authorities

which supervise such bodies, such as authorities responsible to supervise procedures

of liquidation and bankruptcy of institutions and in charge of the approval of

statutory auditors. Furthermore, ot}ler specific professions have been considered as

potential recipients of confidential information, e.g. those which detect breaches of

company law or supervise payment systems.

Article 5

Considering auditors' access to financial undertakings' accounts and other essential

material, they are in a position to play an important role in the overall supervisory

process. This article sets out an obligation for statutory auditors of the accounts of

companies to inform the competent authorities if they become aware of

irregularities in the financial undertakings' affairs.

Article 6

This article requires that Member States should implenientthe present directive by

1 July 1995. This date is aligned with the date of implementation of the ISO.

·...:

7

Article 7

This is not a definition article, but a simple means for an efticient drafting of this

directive, making reference to all the institutions defined in the framework .

directives.

Proposal for a

COUNCIL DIRECTIVE

amendine; Council Directives 77 1780/EEC and 89/646/EEC in the field of credit institutions,

Council Directives 73/239/EEC and 92/49/EEC in the field of non-life insurance,

Council Directives 79/267/EEC and 92/96/EEC in the field of life assurance, and

Council Directive 93/22/EEC in the field of investment firms

in order to reinforce prudential supervision

..

THE COUNCIL OF THE EUROPEAN COMMUNITIES.

Having regard to the Treaty establishing the European Economic Community, and

in particular the first and third sentences of Article 57(2) thereof,

Having regard to the proposal from the Commission1,

In cooperation with the European Parliament2,

Having regard to the opinion of the Economic and Social Committee 3•

Whereas the First Council Directive 77/780/EEC of 12 December 1977• and the

Second Council Directive 89/646/EEC of 15 December 1989' on the coordination

of laws, regulations and administrative provisions relating to the taking up and

pursuit of the business of credit institutions lay down the authorization requirements

for credit institutions;

1 OJ N ° C .. , . . . . . . . . . 199 .• p. 2 OJ No C .. , . . . . . . . . . 199., p. 3 OJ N ° C .. , . . . . . . . . . 199., p. 4 OJ No L 322, 17.12.1977, p. 30 5 OJ No L 386, 30.12.1989, p. 1

.;.

\

Whereas the First Council Directive 73/239/Et:.C of 24 July 19736, and in particular

as amended by the Third Council Directive 92/49/EEC of 18 June 19927 on the

coordination of laws, regulations and administrative provisions relating to the taking

up and pursuit of the business of direct insurance undertakings ·other than life

assurance lay down the authorization requirements for imrurance undertakings in the

field of direct non-life insurance;

Whereas the First Council Directive 79/267/EEC of 5 March 19798, and in

particular as amended by the Third Council Directive 92/96/EEC of 10 November

19929 on the coordination of laws, regulations and administrative provisions relating

to the taking-up and pursuit of the business of direct life assurance lays down the

authorization requirements for a~surance undertakings in the field of direct life

assurance;

Whereas Directive 93/22/EEC of 10 May 199310 on investment services in the

securities field lays down the authorization requirements for investment firms;

Whereas the need for the reinforcement of competent authorities' powers entails

amendment of the existing Directives in the sectors concerned; whereas a binding

Community Directive is the sole appropriate means of meeting this need; whereas

this measure restricts itself to the minimum required to achieve the desired objective

and is accordingly proportional thereto;

Whereas this Directive has been the subject of consultation with the Banking

Advisory Committee, which was set up by Council Directive 771780/EEC, and the ·

Insurance Committee which was set up by Council Directive 91/675/EEC11

6 OJ No L 228, 16.08.1973, p. 3 7 OJ No L 228, 11.08.1992, p. 1 8 OJ No L 63, 13.03.1979, p. 1 9 OJ No L 360, 09.12.1992, p. 1 10 OJ No L 141, 11.06.1993, p. 27 11 OJ No L 374, 31.12.1991, p. 32

' i I i

Whereas the closing down of the Bank for Credit and Commerce International

(BCCI) and other events have given rise to the need to strengthen the powers of the

competent authorities for the supervision of credit institutions in the Member States:

whereas it is desirable to adopt similar measures in the whole financial services

sector, including the competent authorities for the supervision of insurance

undertakings and investment firms;

Whereas Directive 77/780/EEC, Directive 89/646/EEC, Directive 73/239/EEC, as

amended by Directive 92/49/EEC, Directive 79/267/EEC, as amended by Directive

92/96/EEC, and Directive 93/22/EEC Cthe Directives') lay down the conditions

which must be fulfilled before Member States' competent authorities may grant

authorization for the taking-up of business; whereas these conditions do not include

the requirement that where a credit institution, insurance undertaking or investment

firm belongs to a group, the group structure must be sufficiently transparent in

order to allow effective supervision;

Whereas the Directives should therefore require applications for authorization to

contain sufficiently detailed information to allow the competent authorities to assess

whether effective supervision can be exercised in practice;

Whereas Directive 89/646/EEC, Directive 92/49/EEC, Directive 92/96/EEC and

Directive 93/22/EEC already provide for information on the identity of

shareholders or similar persons and of the amount of the holdings to be submitted to

the competent authorities and that these competent authorities shall refuse

I J

Wr!] 973 '93 T iL

• ·authorization under circumstances which do 110t ensure the sound and prudent

;agement~

Whereas, in the case of existing credit institutions, insurance undertakings and

investment flfDlS it should be made clear that any material change of the conditions

. under which the competent authorities have granted a licence should be

communicated to these authorities for reconsideration in order to reassess their

fulfilment with the regard to the objectives of the authorization; whereas the

Directives already empower the competent authorities to withdraw an authorization

if the conditions under which the authorization was granted are rio longer fulfilled;

whereas in the case that a group to which an existing credit institution, insurance

undertaking or investment firm belongs is transformed in such a way that its

financial, legal or decision-making structure, or its administrative organization lacks

transparency so that it can no longer be supervised effectively, the present measures

would give the necessary powers to the supervisory authorities to withdraw the

authorization granted as an ultimate sanction;

Whereas effective supervision of a credit institution, insurance undertaking or

inve:·stment finn could be hampered if the competent authorities can not maintain

effective contact with the management because its head office is located in a

different country than its registered office; whereas for this reason the head office

of a credit institution, insurance undertaking or investment finn must be located in

the same country as that of the registered office; whereas Directive 93/22/EEC

already lays down this requirement for investment firms;

• Whereas Directive 89/646/EEC, Directive 92/49/EEC, Directive 92/96/EEC and

Directive 93/22/EEC already provide for a restricted list of bodies to whom

information may be passed on by the competent authorities; whereas in order to

maintain confidentiality the list of recipients of information should remain narrowly

limited; whereas, however, in the light of the BCCI affair and other events it is

considered desirable to include in that narrow list certain bodies which play a key

· role when investigations into a credit institution, an insurance undertaking or an

investment firm might be necessary in order to support the supervisory objectives;

Whereas Directive 89/646/EEC, Directive 92/49/EEC, birective 92/96/EEC and

Directive 93/22/EEC give provisions for the exchange of confidential information

between the competent authorities and persons responsible for carrying out statutory

audits of the accounts of credit institutions, insurance undertakings and investment

firms; whereas, due to auditors' access to material essential to credit institutions',

insurance undertakings' and investment firms' fulfilment of their obligations, and in

the interest of protecting the depositors, policyholders and investors, the auditors

should be obliged to pass on certain relevant information to the competent

authorities; whereas this obligation should only be triggered by a narrowly defined

set of circumstances;

Whereas in the case of a credit institution, insurance undertaking or investment firm

with branches operating in more than one country, or which is part of a group of

credit institutions, insurance undertakings or investment firms which is established

in more than one country, it is desirable to have a single auditor for the

l3

\~ :MI I iS IJ) 53 Li 4 IE I A

organization and coordination of the seperate au. s wherever possible: whereas it is

however not appropriate to lay this down as an obligation in this Directive:

Whereas it is desirable that the competent authorities have the right to veto the

appointment or reappointment of persons responsible for carrying out the statutory

audits of accounts, for example if they have failed to cooperate with the competent

authorities or if they have otherwise performed unsatisfactorily from those

authorities' point of view; whereas in view of the present situation of Member

States' laws and regulations concerning the relationship between competent

authorities, auditors and sharehol~ers, it is not appropriate to provide for this in

this Directive,

HAS ADOPTED THIS DIRECTIVE

..

ARTICLE 1

Definition

To Article 1 of Directive 771780/EEC, a new fifth indent,

to Article 1 of Directive 92/49/EEC, a new letter (I) and to Article 1 of Directive·

92/96/EEC, a new letter (m) and

to Article 1 of Directive 93/22/EEC, a new number 15

shall be added which reads:

" 'group' means a situation where two or more undertakings are linked directly or

indirectly by way of

(a) 'participation' which shall mean the ownership, direct or indirect, of 20% or more

of the voting rights or capital of an undertaking or

(b) ·control' which shall mean· the relationship between a parent undertaking and a

subsidiary, as defmed in Article 1 of Directive 83/349/EE02, or a similar

relationship between any natural or legal person and an undertaking.".

ARTICLE2

Group structures

I. To Article 3(2) of Directive 771780/EEC, a fourth indent, and

to Article 3(3) of Directive 93/22/EEC, a third indent

shall be added which reads:

12 ° OJ N L 193, 18.7.1983, p. 1

"

•

where a fmancial liildertaking is part of a group, the competent authorities must

satisfy themselves that the structure of the group and in particular the proposed

relationships between the financial undertaking and other entities in the group

are such as to enable the financial undertaking to be supervised effectively."

2. To Article 3(4) of Directive 77/780/EEC, after the first sentence, and

to Article 3(4) of Directive 93/22/EEC, after the first sentence,

the following sentence shall be added which reads:

"Where a tinancial undertaking is part of a group, information about the structural

· organization of the group must he provided including sufficient details on the

structure of the group and proposed relationships between the financial undertaking

and the other entities of the group to allow the competent authorities to assess

whether the fmancial undertaking can be supervised effectively. "

3. To Article 8(1) of Directive 73/239/EEC, as amended by Directive 92/49/EEC,

and to Article 8(1) of Directive 79/267/EEC, as amended by Directive 92/96/EEC,

a new paragraph 1 a) shall be added which reads:

"Where an insurance undertaking is part of a group the competent authorities shall

satisfy themselves that the structure of the group and in particular the proposed

relationships between the insurance undertaking and other entities in the group are

such as to enable the insurance undertaking to be supervised effectively. The

insurance undertaking concerned shall provide information about the structural

organisation of the group including sufficient details on the structure of the group

·': •.' ··.

• and proposed relationships between the insurance undertaking and the other entities

of the group."

4~(a) To Article 3 of Directive 771780/EEC, and

· to Article 3 of Directive 93/22/EEC,

a new paragraph 8 shall be added which reads:

"Member States shall require that a financial undertaklltg shall notify to the

competent authorities:

-when it becomes part of a group,

- when the structure of the group to which it belongs changes;

under these circumstances paragraph 4 applies."

(b) To Article 8 of Directive 73/239/EEC, as amended by Directive 92/49/EEC, and

to Article 8 of Directive 79/267/EEC, as amended by Directive 92/96/EEC, a

new paragraph 5 shall be added which reads:

"Member States shall require that a financial undertaking shall notify to the

competent authorities:

- when it becomes part of a group,

- when the structure of the group to which it belongs changes;

under these circumstances paragraph l(a) applies."

· .. ··It-

ARTICLE 3

Head office and Registered office

To Article 3(2) of Directive 771780/EEC and to Article 6(a) of Directive 73/239/EEC,

as amended by Directive 92/49/EEC, and to Article 6(a) of Directive 79/267/EEC, as

amended by Directive 92/96/EEC, the following indent shall be added which reads:

" the head office of the financial undertaking must be in the same Member State as

its registered office and that in which the authorization is being requested."

ARTICLE4

Exchange of information

1. Article 12(5) of Directive 771780/EEC as amended by Article 16 of Directive

89/646/EEC,

Article 16(5) of Directive 92/49/EEC and Article 15(5) of Directive 92/96/EEC

and

Article 25(5)(b) of Directive 93/22/EEC

shall be amended as follows:

(a) The second indent shall read:

"- bodies involved in the liquidation and bankruptcy of the fmancial

undertaking and in other similar procedures and 'ttre authorities competent to

supervise such bodies,"

• (b) The third indent shall read:

"- persons responsible for carrying out statutory audits of the accounts of the

· fmancial undertaking and the authorities which are responsible for the approval

of statutory auditors, "

(c) A new fourth indent shall be added which reads:

"- bodies responsible for the detection and investigation of breaches of

company law, in particular laws relating to the rights and obligations of

shareholders and of members of the administrative, managerial and

supervisory bodies of companies, and to take-over bids and the persons

appointed by such responsible bodies to carry out specific tasks."

2. To Article 12(5) of Directive 771780/EEC, as amended by Article 16 of Directive

89/646/EEC, and

to Article 25(5)(b) of Directive 93/22/EEC,

a new fifth indent shall be added which reads:

" departments of central banks or other bodies responsible for the oversight of

payment systems, "

3. To Article 12(5) of Directive 771780/EEC, as amended by Article 16 of Directive

89/646/EEC, a new paragraph 8 shall be added which reads:

"This Article shall not prevent the competent authorities from communicating the

information referred to in paragraphs 1 to 4 to a clearing house or other similar

body recognized under national law for the provision of clearing or settlement

services to one of its markets if they consider that it is necessary to communicate

'20

• the information in order to ensure the proper functioning of those bodies in relation

to defaults or potential defaults on the market. The information received shall be

subject to the conditions of professional secrecy imposed in paragraph 1. The

Member States shall, however, ensure that infonnation received under paragraph 2

may never be disclosed in the cases referred to in this paragraph except . with the

express consent of the competent authorities which disclosed the information. "

ARTICLES

Role of statutory auditors

To Article 12 of Directive 771780/EEC, as amended by Article 16 of Directive

89/646/EEC, a new paragraph 9,

to Article 16 of Directive 92/49/EEC and Article 15 of Directive 92/96/EEC a new

paragraph 7, and

to Article 25 of Directive 93/22/EEC, a new paragraph 10

shall be added which reads:

"The Member States shall provide that any person responsible for carrying out statutory

audits of the accounts of the financial undertaking shall have the duty to report

immediately to the competent authorities for prudential supervision if in the course of

this work, he becomes aware of facts which are likely to lead to a serious qualification

or refusal of the certificate of audit; endanger the existence of the fmancial

undertaking; or gravely impair its develop· ,t or imperil the protection of clients, or

which indicate that the principles of sound 1. :agemen· have been seriously violated."

; • ARTICLE 6

FINAL PROVISIONS

No later than I July 1995 Member States shall adopt the laws, regulations and

administrative provisions necessary for them to comply with this Directive.

These provisions shall enter into torce no later than 31 December 1995. The Member

States shall forthwith inform the Commission thereof.

ARTICLE 7

Whenever the words 'financial undertaking' are used in the Directive they shall be

replaced by:

'credit institution' when this Directive amends Directives 77 /780/EEC and

89/646/EEC,

'insurance undertaking' when this Directive amends Directives 73/239/EEC,

92/49/EEC, 79/267/EEC and 92/96/EEC,

'investment firm' when this Directive amends Directive 93/22/EEC.

ARTICLE 8

This Directive is addressed to the Member States.

IMPACT ON COMPETITIVENESS AND EMPLOYMENT

I. What is the main justification for the measure ?

The purpose of the Directive is to amend existing Directives in order to reinforce

supervision in the banking, insurance and investment services sectors.

II. Characteristics of the enterprises concerned

The enterprises concerned under this Directive are not only credit institutions.

financial institutions, assurance undertakings, insurance undertakings and

investment firms, but also statutory auditors, authorised in the Community.

III. What are the obligations imposed directly on enterprises?

Firstly, according to the proposal, Member States' competent authorities may

impose on the enterprises concerned to provide information on their group structure

so that they can be supervised effectively.

Secondly, statutory auditors shall have the duty to report, under certain

circumstances, serious irregularities to the authorities competent for the prudential

supervision.

IV. What obligations are likely to be imposed indirectlv on enterprises through

local authorities ?

None.

. V. Are there special measures for SMEs ? If so, of what kind ?

None.

VI. What is the anticipated effect on:

(a) the competitiveness of enterprises'!

(b) employment ?

(a) By reinforcing supervision of the afore-mentioned ~ntreprises, it is ensured that

these can engage in direct competition in common banking, insurance and

investment services markets.

(b) An adequate supervision of the enterprises concerned serves to ensure the

continuity and therefore to protect the afore-mentioned sectors.

VII. Have the social partners been consulted ? What are their views '!

No. The measure proposed has no impact on the industrial relationship and the level

of employment.

MOTIVATION OF THE •acCI FOLLOW-UP DIRECTIVE•

IN RESPECT OF THE PRINCIPLE OF SUBSIDIARITY

The aim of this directive is to modify the existing key directives in the three relevant

financial sectors. These directives govern the activities of credit institutions (First and

Second Banking Coordination Directives), of insurance undertakings (Third Non-life

Insurance Directive and Third Life Assurance Directive) and of finns offering investment

services (Investment Services Directive). These texts aim "to constitute the essential

instrument for the achievement of internal market, a course determinated by the Single

European Act and set out in timetable form in the Commission's White Paper, from the

point of view of both the freedom of establishment and the freedom to provide fmancial

services" in the three sectors mentioned above. They introduce the "European passport"

for institutions in the three financial sectors by means of the mechanism of mutual

recognition of authorisation and the essential harmonization of the prudential control

systems, in applying the principle of control by home Member State. The present proposal

for a directive aims to strengthen the prudential control systems and covers in particular

cross-border aspects following the problems encountered recently in international fmancial

markets. In this way, it falls under the obligations wbich arise to the Community

according to Article 57 of the EEC Treaty.

The measures under consideration in this directive have to apply to all the institutions

concerned in the Community. They also aim in particular at financial groups located in

several Member States requiring cooperation and exchanges of information between

• 1"'1 (_ .

LP

prudential authorities of various countries in which such information is covered by rules .

on confidentiality. Certain Member States have already included in their national

legislation certain aspects of these measures, or are doing so. In other Member States, the

adoption of European legislation on this subject is awaited.

In order to be applied in a coherent manner, it is desirable that this legislation is

coordinated at Community level. The absence of common rules affects the mutual

confidence between authorities responsible for prudential supervision. The limits of the

exchange of prudential information between these authorities has in particular to be

circumscribed in a precise way. .

The envisaged measures bring considerable value to the strengthening of the prudential

supervision of institutions in the financial sectors, which contributes to the stability of

financial markets as a precondition to a robust economy in general.

A directive amending the directives referred to above forms the only possible method of

sufficiently constraining legal action for the Community. A recommendation would be

insufficient.

The directive will make it possible to apply the general principles of reinforcement of

prudential supervision of the companies referred to above in banking, insurance and

investment services sectors. A uniform regulation is required insofar as it is absolutely

necessary in this directive (in terms of the definition, refusal or withdrawal of

authorisation in the event of financial institutions forming part of non-transparent groups,

and the limits of the exchange of prudential information). A certain degree of flexibility

can be accepted for the additional rules to be adopted at the national level (e.g. a single

auditor for the group, the right of veto against reappointment of auditors given to

prudential authorities, etc.). Concrete application measures, drawn up by the Member

States, will be able to supplement this directive.

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ISSN 0254-1475 , ·

COM(93) 363final:>':<~j ._ . . . .· .. ,~, ·-

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DOCUMENTS

EN 09

Catalogue nu~ber: CB-C0-93-392-EN-C

Office for Official Publications of the European Communities

L-2985 Luxembourg

ISBN 92-77-58177-8